January 17, 2009
Slow Year Prompts AMD To Cut 9 percent of Workers
After its third round of layoffs in a year, Advanced Micro Devices Inc. plans to cut 1,100 jobs and slash the remaining employees' pay, as the chipmaker struggles through a slowing economy.
AMD told 900 workers on Friday their positions would be cut. The rest of the reductions are coming from attrition and the previously announced sale of a business unit.
Among the company's 15,000 current workers, 3,000 of those in manufacturing operations will not be affected by Friday's announcement. So AMD's cut of 1,100 jobs amounts to 9 percent of the remaining 12,000 workers.
This marks the companies third round of major layoffs in the last year. Around 600 workers were cut just last month, and earlier in 2008 around 1,600 were jettisoned.
Those workers who survived the cutbacks will receive a resulting pay cut. A 20 percent salary cut will also affect AMD's CEO Dirk Meyer and executive chairman Hector Ruiz. Vice presidents and other top management will have their pay cut 15 percent, other salaried workers will go down 10 percent, and pay for hourly workers will fall 5 percent. AMD said the pay cuts are temporary. AMD was not specific about how pay would be cut in other countries.
AMD shares fell to $2.24 in afternoon trading on Friday.
The company has seen several CEO changes and sold nearly a fifth of the company to an investment arm of the Persian Gulf state of Abu Dhabi. AMD has also agreed to break off its factories in a moneysaving move as the company is in the throes of a big restructuring.
AMD is the smaller rival of the world's biggest semiconductor company, Intel Corp., but continues to struggle with product delays, huge debt from its $5.6 billion acquisition of graphics chipmaker ATI Technologies, and the inability to outspend Intel on developing new technologies.
AMD made the announcement for the cuts a day after Intel reported that fourth-quarter profits dropped 90 percent and sales fell 23 percent, a sign of the severity of the slowdown facing both companies, which provide nearly all the microprocessors for the world's PCs.
The company has already warned that its sales will come in 33 percent lower than a year ago after releasing its fourth-quarter results. AMD has lost $5.6 billion over the past eight quarters, and analysts aren't expecting relief any time soon.
AMD also plans to write down ATI's value by an additional $684 million, which will appear in the quarterly results next week. The chipmaker had previously slashed ATI's value by nearly $2.5 billion.
The move suggests that AMD believes ATI is worth less than half what AMD paid for it.
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